Managing money as a couple: A how to guide

In Edward Lear’s fairy tale, ‘The Owl and the Pussycat’ knew what they were up to when they bundled up their money together. No doubt their shared resources facilitated their pea-green boat journey, but the reality is that managing money as a couple is a little more complicated than fairy tales. But it can have a happy ending

Here we have created a how-to guide on managing money as a couple:

Watch Out for Debts

It might not be the most cheerful place to start, but before you consider managing money as a couple, you both need to take a good and honest look at any debts either of you has. Believe it or not, living together, or being married, doesn’t itself necessarily bring the implications – sharing a bank account or mortgage does. This is when you’ll begin to discover that your partner’s poor credit score soon affects yours.

Furthermore, when you have joint accounts, you are collectively responsible for both debt and overdrafts. That means, even if you didn’t spend a penny of the overdraft yourself, you’d still be liable for paying it back. So, trust and honesty need to make the foundation of your financial relationship.

Trust, Honesty, Boundaries and Independence

Therefore, from the very start, you both need to be clear with each other about your expectations. We all bring different opinions to the table where finances are concerned. Don’t assume you automatically think the same way. Sit down together and draw up your priorities and common goals. Establish which will be joint money decisions, and which can be embarked upon independently. In the context of how they manage their money, it’s not about whether it seems fair to others, but whether it is right to you.

Nonetheless, the majority of couples do find that retaining some degree of financial independence is important in the overall goal of managing finances together. This level of independence needs to be as clear as everything else within the joint management of funds.

Equality of Understanding

It is in the interests of both partners that you each understand everything to do with your finances. It relieves pressure and burdens from one individual, and it ensures that responsibility is fairly apportioned. It also secures you, should something happen to your partner. For this reason, it is also important to consider Life Insurance and to name your partner as the primary beneficiary, and Income Protection, so that you are adequately financially protected in the future.

Keep Communication Open

Finances are rarely a static state of play in a relationship. As such, lines of communication regarding money should always be kept open and systems re-evaluated over time.

For example, to avoid conflict, you should consider discussing any expensive purchases with your partner before you spend. Also, to make sure you are on the same page as one another, try sitting down together at the end of each month to make sure budgets have been kept to and if not, it may be worth re-evaluating your budget.

Money Managing Options for Couples

There are some different approaches you can take towards your money which still allows all of the above principles. Which suits you best will depend on the nature and commitment of your relationship. For example, a young couple without shared living expenses or children may not have the same need or drive to manage money together as a married couple with dependent children.

You could choose to keep separate accounts, both paying a percentage of your income, or an equal amount, into a shared account. The shared account would then be used for common expenses such as living costs. You may alternatively choose to pool everything and both share and manage everything jointly. You could also, although it has its drawbacks, have an arrangement whereby the main earner pays an ‘allowance’ to the other – you should take particular care in this situation.

Start Small, and Build Together

As with other aspects of your relationship, it makes sense to deepen the commitment gradually over time. Therefore it could make sense to run a joint bank account together, without an overdraft, before embarking on a combined mortgage. This gives you both the opportunity to learn what works for you as a couple where money is concerned.

What if it’s Not Working?

If you find that money management is causing problems in your relationship, don’t despair. Communication may be all you need, but if you require more help managing money as a couple, or help with that communication, then some organisations can help. Financial advisers, debt counsellors, and relationship counsellors will all provide you with the assistance you need.

Whether being married, or being in a civil partnership, or not, also affects how you should manage money together as a couple. This in itself is an enormous topic which needs exploring in greater depth.

Managing Money Together Makes for Happier Relationships

Interestingly, in Bloomberg View, Megan McArdle discusses research that shows that the more couples pool their money, the happier their marriage is. You really can be as blissful as the Owl and the Pussycat.

Please note: All information within Your Resource Centre is correct at the time of publication, and we make every effort to keep content accurate. However sometimes information may be out of date. You should not rely on this information when making financial decisions as no financial advice has been given. The information reflects the view of the author and not that of Shepherds Friendly Society.

If you’re not sure what to do when making financial decisions then you should consult a financial adviser, who will likely charge for any advice that is given.

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